Mexico Panics!! Peso Goes Haywire As Ford Abandons Mexicans, Others May Follow
First, they thought Donald Trump couldn’t possibly win the presidency. When Donald finally wins beyond polls’ expectation, they thought Trump’s tough rhetoric wouldn’t last. Now, the Mexicans are dead worried about Trump. Mexico government is panicking as Ford Motor Co. cancels its plan to build a US$1.6 billion auto manufacturing plant in San Luis Potosi.
Before the 2016 Presidential Election last November, Mexico experienced its first round of panic during Clinton’s 9/11 drama where she was basically dragged and thrown into the back seat of a van (or rather a black-painted ambulance) after developing what many believed to be a seizure– most likely due to Parkinson’s – while observing Sept 11 anniversary.
On that faithful day, Mexican Peso reached the psychological barrier of 20 pesos per dollar. As an economic powerhouse who buys about 80% of Mexico’s exports, the peso is at the mercy of America. The joke was that if you want to know how Donald Trump is doing, all you need to do is check the Mexican peso.
Three days after the election on November 11, the peso hit record of 21.3952 to a US dollar. On Wednesday, it broke that record when the peso hit 21.619 to a dollar, thanks to Ford Motor’s announcement that it will cancel production of a US$1.6 billion plant in Mexico, and instead invest in Michigan. Trump had bashed the automaker for moving jobs outside the United States.
While the market is increasingly convinced Donald Trump wasn’t kidding around about tackling Mexico and production in Mexico, the Mexicans across the border are increasingly nervous about losing their jobs. “Trump leaves Mexico without 3,600 jobs,” read the headline on El Universal, while Reforma newspaper screamed – “Ford’s braking jolts the peso.”
Besides Ford, Trump also attacked General Motors with a tweet for selling a Mexican-made Chevy Cruze in the United States. Two weeks before inauguration, the scuttling of the planned Ford factory and Trump’s pressure on General Motors should be a “much-needed wake-up call,” said Mexico analyst Alejandro Hope.
It shows “how much actual leverage Trump has within specific companies, which is far greater than what Mexican elites thought until recently,” Hope said. “They claimed that at the end of the day economic interests would prevail over political messaging. That’s clearly not the case.” This proves that Trump is not an empty vessel at all.
Mexican El Universal also recalled the deal Trump struck in December with Carrier to keep 800 of 1,300 jobs at an Indiana furnace factory from being sent to Mexico, in return for millions of dollars in tax incentives. It also implicitly criticized the Mexican government’s response to the incoming administration.
The newspaper said – “Mexico loses thousands of jobs with no word on a clear strategy for confronting the next U.S. government which has presented itself as protectionist and, especially, anti-Mexican. Trump will try to recover as many U.S. companies that have set up in Mexico as possible. He will try to make them return at whatever cost, through threats or using public resources.”
Another newspaper, La Jornada, said “Ford’s decision is indicative of what awaits the economies of both countries. For ours a severe decreases in investment from our neighbouring country, and for the U.S. a notable increase in their production costs.” On the same matter, analyst Alejandro Hope said more decisions like Ford’s are likely to come.
It’s not hard to understand the sudden explosion of frustration by Mexican leading newspapers. Ford plant was under construction and was slated to employ nearly 3,000 local workers. Guards at the (Ford) construction site’s entrance say that the mood is very tense, and that the situation is deeply discouraging. The scrapped project adds to a rough start to 2017 for Mexicans.
Starting January 1, gas prices in the country spiked by as much as 20% in some parts of the country, when the government lifted long-imposed subsidies. Protests have broken out every day since the gas prices spiked, with demonstrators blocking major highways and main roads in states throughout the country. There are also fears that inflation is going to rise above 4% this year.
People of Mexico, in general, are mad at Donald Trump as well as their own leaders. Clueless but frustrated, they conveniently blame Mexico’s leaders for not doing enough to stand up to Trump. But what else could their leaders do that Hillary Clinton and liberals and globalists hadn’t done against Trump, except assassinates him?
Judging from the construction of Ford’s supposedly auto plant located outside the small town of Villa de Reyes in the central Mexican state of San Luis Potosi, the American automaker has committed to its plan until Trump skilfully convinced, persuaded, and even “probably threatened” the top executives to abandon the project and move back to U.S.
Now, is there anyone in Mexico including Mr. Vicente Fox, former President of Mexico who said “Trump is absolutely crazy” and yelled Trump is an “illegitimate president”, dares to bet incoming President Donald Trump would not build the Mexico Wall? Let’s hear Fox says again – “I’m Not Going To Pay For That Fucking Wall”.
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from FinanceTwitter http://www.financetwitter.com/2017/01/mexico-panics-peso-goes-haywire-as-ford-motor-abandons-mexicans-others-may-follow.html
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